2021 (1) TMI 327 - HC - Income Tax

Seeking reward for providing information - Tax Evasion Petition (TEP) and Benami Transaction Tax Evasion Petition - the Income Tax Informants Rewards Scheme, 2018 - The petitioner, in the petition has pleaded that the petition is filed by him as a public spirited person. However, in spite of the said averment, the same has not been labelled as a Public Interest Litigation and is not in compliance with the Delhi High Court (Public Interest Litigation) Rules, 2010 for filing Public Interest Litigation - HELD THAT - Prima facie it appears that TEPs filed by the petitioner or by any of the other legal heirs or at their instance as well as this petition, are to coerce the said M/s JPA and M/s Vijay Automobiles to settle the claims, inter alia of the petitioner s wife. The same cannot be permitted and is an abuse of the process of the Court. The Court cannot allow its machinery and process to be used and invoked by such unscrupulous petitioners, to settle their own scores. Though certain schemes brought out by the Income Tax Department encourage the filing of complaints of income tax evasion to be made and which can obviously be made only by insiders who have fallen apart from the entity/person earlier indulging in tax evasion, but the petitioner, though referring to the same, has not filed any copy of the said scheme and has not shown any provision under which the petitioner, besides lodging a complaint or furnishing information, has a right to activate the Court machinery to issue mandamus to the respondent to take further action against the person/s complained against. Such abuse of process of this Court cannot be permitted.

Summary

Issues:
1. Mandamus sought for investigation by Income Tax authorities in response to Tax Evasion Petitions.
2. Failure to implead the entities against whom the complaints were made.
3. Petition not labeled as Public Interest Litigation (PIL) as per Delhi High Court rules.
4. Allegations of personal interest and coercion in filing the petitions.
5. Lack of provision allowing activation of Court machinery based on complaints.
6. Abuse of the Court process.

Analysis:
1. The petitioner sought a mandamus for the Directorate of Income Tax Investigation and Member Investigation, Central Board of Direct Taxes to conduct a time-bound investigation based on Tax Evasion Petitions lodged against specific entities. The petitioner urged for the petitions to be treated under the Income Tax Informants Rewards Scheme, 2018.

2. However, it was noted that the petitioner failed to implead the entities, M/s JPA and M/s Vijay Automobiles, against whom the complaints were made. This omission raised procedural concerns regarding the parties involved in the petition.

3. The petition, although claimed to be filed in the public interest, was not categorized as a Public Interest Litigation (PIL) as per the Delhi High Court rules. The rules require a declaration of no personal interest in the litigation and a motive solely for public interest, which the petitioner did not adhere to.

4. The Court observed that the petitioner's familial connections to one of the entities against whom complaints were filed raised suspicions of personal interest and coercion. It was suggested that the motive behind the petitions might be to pressure the entities to settle claims related to the petitioner's wife, indicating an abuse of the Court process.

5. Despite mentioning schemes encouraging complaints of income tax evasion, the petitioner did not provide copies of the schemes or demonstrate any legal provision allowing the activation of Court machinery solely based on complaints. This lack of legal basis further undermined the petitioner's case.

6. In light of the above concerns, the Court concluded that the abuse of the Court's process could not be tolerated. The petitioner's counsel, acknowledging the mistake, withdrew the petition without liberty to pursue the action further, but with the liberty to take steps under the Informants Scheme of the Income Tax Department.

7. Consequently, the petition was dismissed as withdrawn with the mentioned liberty. The judgment highlighted the importance of upholding legal procedures, preventing abuse of the Court's processes, and maintaining the integrity of the legal system.